Banks dive as Vickers report calls for radical shake-up

Banks led markets sharply lower in early trading after a long-awaited report from Sir John Vickers and the Independent Commission on Banking proposed a radical shake-up of the sector.

The report said banks should split their investment and retail banking operations, as well as raise capital requirements sharply - above levels proposed by Basel III regulations.

In reaction, shares dropped sharply at open, dragging the FTSE 100 down over 2%, or 115 points, to 5,099.

Banks were the biggest losers in early trading, with Barclays off 2.9% or 4.15p, at 139.9p, Lloyds lower by 2.37p or 0.74p, at 30.3p, and RBS down 4.8%, or 1.03p, at 20.47p.

Asian-focused banks HSBC and Standard Chartered were more steady but still saw losses.

HSBC shed 1% or 4.9p, falling to 499.6p, while Standard lost 0.9%, or 12.5p, sliding to £13.12.

Banks are yet to respond to the proposals, which would need to be ratified by the government.